The wholesale price index (WPI) inflation for August rose to a higher-than-expected 7.55 per cent, leaving little elbow room for the Reserve Bank of India to cut policy rates on Monday.

This was higher than the July inflation of 6.87 per cent, which was a near three-year low. The WPI inflation for August 2011 stood at 9.78 per cent.

Part of the reason for the jump in inflation could be the fact that recent revision in electricity tariffs in certain States are filtering through, say economy watchers.

They also felt that the sub-7 per cent reading in July may have been an aberration.

The June WPI inflation has now been revised to 7.58 per cent, from an earlier provisional level of 7.25 per cent. When July WPI was announced, the May number was not revised.

Core inflation in August remained steady at 5.56 per cent, but higher than 5.4 per cent in July and 4.9 per cent in June this year.

Overall food inflation declined to 9.14 per cent in August, from 10.06 per cent in July.

Given the current inflation trend and Thursday’s diesel price hike, India is staring at above eight per cent inflation readings in the coming months, say economy watchers.

It is expected that the RBI would not rush to cut rates and would weigh the inflationary impact of higher fuel prices.

RBI Deputy Governor K.C. Chakrabarty on Friday highlighted that inflation control would be the top-most priority of the central bank.

Primary articles inflation in August 2012 stood at 10.08 per cent (12.46 per cent in August 2011), manufactured products inflation stood at 6.14 per cent (7.87 per cent).

>srivats.kr@thehindu.co.in

Related Topics
comment COMMENT NOW